"We're seeing some really creative and imaginative concessionaryprograms," he says.At the Kensington at Royal Palm Beach, forinstance, new purchasers can get 13% of the unit's purchase pricerebated as a sort of security deposit. The building's owners alsoguarantee the unit buyer a competitive market rate income for twoyears. "There's a question as to whether this practice is legal,"says McCabe. On a three-bedroom unit, the guarantee is about $1,800per month, which over two years amounts to $44,000, he explains.Add the 13% rebate--which on a $300,000 unit would be $39,000--itworks out to about $80,000.

"So they're giving away more than $80,000 in incentives that aredone after the closing, separate from the sales agreement," saysMcCabe. "You could make the case that it's inflating values becausethe seller truly is only receiving $220,000 in value off of that$300,000 sale. I would think the mortgage lenders would have somereal problems with that type of business model because, in essence,if they're[the lenders] making an 80% loan for a $300,000 unit,they're loaning out $260,000 on a unit that truthfully is onlyworth $220,000. But because of the way the rebate isstructured--after the closing--it's being hidden from the lender.There are questions as to whether that's legal, but it'snonetheless happening."

Indeed, local reports say the purchase price for the community's102 units--from $325,000 and $340,000--is similar to what condoswere trading for during the peak of the market. Yet most of thebuyers, it seems, are investors that won't be living in theirunits. McCabe says there are even multiple purchases made by thesame investor. Meanwhile, Lehman Brothers has instituted a "ValueProtection Program" at the West Bay Club, its luxury residentialproject in Estero, FL. Under the program, which runs through June1, the developer is guaranteeing it will sell or buy back the unitat full cost three years after closing. Lehman is betting therewill be a market recovery within that period, bringing condo pricesup again. In that case, says McCabe, they're hoping the unit buyerswill want to hold on to their investments.